Vattenfall Q2 Results 2008 · Q4 2000 Q2 2001 Q4 2001 Q2 2002 Q4 2002 Q2 2003 Q4 2003 Q2 2004 Q4 2004 Q2 2005 Q4 2005 Q2 2006 Q4 2006 Q2 2007 Q4 2007 Q2 2008 ... to build Europe’s

© Vattenfall AB

VattenfallQ2 Results 2008

Presentations by

Lars G. Josefsson, CEO andJan Erik Back, CFO

30 July 2008

30 July 2008© Vattenfall AB

2Main topics to be discussed

CEO Lars G. Josefsson:• Sales & earnings• Production volumes• Nuclear update• Moorburg update• Transmission update

CFO Jan Erik Back:• Prices & hedge position• P&L and EBIT development• Investments• Debt development & cash flow

Q&A


3Highlights Q2 2008

Net sales increased9.9% to SEK 35,259 million (32,077).

EBIT increased 11.4% to SEK 6,316 million (5,672).

Profit after tax decreased 35.3% to SEK 4,043 million (6,252).

Net debt increasedby SEK 12,466 million to SEK 52,011 million compared with 31 March 2008.


4

Return on Net Assetswas 16.1% LTM (FY 2007: 16.6%)- well above target 11%.

Return on Equitywas 14.8 % LTM (FY 2007: 17.6%)- slightly below long-term target 15%.

Highlights Q2 2008


5EBIT development

Quarterly figures, SEK million

Quarterly figures in SEK million, excluding items affecting comparabilityLast 12 month figures in SEK million, excluding items affecting comparability

02 0004 0006 0008 000

10 00012 00014 00016 00018 00020 00022 00024 00026 00028 00030 000

Q42000

Q22001

Q42001

Q22002

Q42002

Q22003

Q42003

Q22004

Q42004

Q22005

Q42005

Q22006

Q42006

Q22007

Q42007

Q22008

HEW consolidated

Bewagconsolidated

GZE consolidated

Danish assets consolidated


6

11.1

17.9

10.4

0.3

17.1

12.5

9.9

0.4

Virtually unchanged electricity generation output

41 %

Q2 2007: 40.0 TWhQ2 2008: 39.8 TWh

Nuclear FossilHydro Other

Other = wind, biofuel, waste


7

3.5

1.81.8

4.0

Higher heat sales for Central Europe

Q2 2008: 5.8 TWh Q2 2007: 5.3 TWh

Central EuropeNordic


8Nuclear update - Germany• The two German nuclear power plants are still off-line.• Reasons for the prolonged standstill are technical problems detected during the

inspection and testing programmes:– Cracks in valves– Impermissibly mounted dowels

• The plants will remain shut down until all necessary renovation work is fully completed. Re-start date is still open.

• Q2 2008 financial impact totals approximately EUR 134 million (SEK 1 260 million) and H1 financial impact totals EUR 284 million (SEK 2 684 million)

Krümmel (1,346 MW) Brunsbüttel (771 MW)


9Moorburg CHP plant project

• In November 2007 Vattenfall obtained a preliminary permit (a so called ”Vorzeitige Baugenehmigung”) to build Europe’s technologically most advanced coal-firedCHP plant in Hamburg, Germany. At the same time Vattenfall signed an agreement with the State of Hamburg regarding additional environmentalinvestments to further improve the environmental performance of the plant.

• Vattenfall began construction work and has already contracted EUR 1.6 billion.

• The plant will be built ready for CCS, which means that the CO2 emissions from the plant will be reduced to almost zero in the medium term.

• Due to the elections in Hamburg, the final environmental permits have been delayed. Since June that means the whole project will be postponed month by month.

• From Vattenfall’s point of view, all necessary requirements for the neededemission licence for air emissions and water use for cooling purposes are being met.

• On 21 April Vattenfall took court action on the grounds of administrative inaction.

• At a court hearing on 16 July the authority undertook to resolve on the permits in September.


10Potential sale of German Transmission operations

• Long-term oriented financial investors: e.g. pension funds, insurance companies, infrastructure funds• Strategic investors: e.g. foreign grid operators, manufacturers of system components, infrastructure

operators

Potential investors

• Sales revenues: EUR 3,295.3 million, of which network fees: EUR 593 million• Net profit/loss: EUR -127.9 million• Significant profitability increase expected due to German regulator‘s improvement of equity return

rates and regulatory framework

Assets:Figures 2007(German GAAP)

Investors must:• have a long-term focus• ensure substantial investments in network extention• promote European integration of the electricity market by continuing to guarantee non-

discriminatory grid access.

Three criteria to be appliedon investors

• End of July: Teaser sent out to potential investors• Mid-August: Expression of interest from potential investors• October/November: Indicative offers• Expected closing (if applicable): first half 2009

Intended timing

• July 25, 2008: Decision to approach potential investors for the German TSO, Vattenfall Europe Transmission GmbH (no final sales decision)

• Background: Ongoing EU debate about ownership unbundling -> status quo is no longer an option• Purely entrepreneurial decision; NO agreement with EU

Facts

Please refer to www.vattenfall.de/stromnetzfakten for more information on transmission networks (English version is underway)


11“Squeeze out” completed in Germany

• The squeeze out of minority shareholders (3.19%) in Vattenfall’s listed German subsidiary Vattenfall Europe AG, initiated in August 2005, was completed on21 April 2008.

• Vattenfall AB now controls 100% of Vattenfall Europe AG.

• Vattenfall Europe AG has been delisted from the German stock exchanges.

• Number of persons at the management board (Vorstand) of Vattenfall Europe AG has been reduced to three from six.

• New Business Unit structure and new BU Heads appointed.

© Vattenfall AB

Financials

Jan Erik Back, CFO


13

Amounts in MSEK Q2 2008 Q2 2007 Change FY2007 LTMIFRS IFRS %

Consolidated income statement

* IAC = items affecting comparability

Net sales 35,259 32,077 9.9 143,639 150,581Cost of products sold 25,755 23,740 8.5 103,404 109,051Gross profit 9,504 8,337 14.0 40,235 41,530Operating profit (EBIT) 6,316 5,672 11.4 28,583 29,254Operating profit, excl. IAC* 6,300 5,655 11.4 28,497 29,178Financial income 740 845 -12.4 2,276 2,099Financial expenses -1,580 -1,502 5.2 -6,926 -7,595Financial net -840 -657 -27.9 -4,650 -5,496Profit before taxes 5,476 5,015 9.2 23,933 23,758Taxes -1,433 1,237 -3,247 -5,332Profit for the period 4,043 6,252 -35.3 20,686 18,426


14Electricity price development

Higher spot pricescompared with Q2-07

(Nord Pool ↑54%, EEX ↑ 97%

Sharp increase in forward prices during Q2.

Monthly Spot Average

15

25

35

45

55

65

75

85

jan-06 apr-06 jul-06 okt-06 jan-07 apr-07 jul-07 okt-07 jan-08 apr-08

NordPool (SYSEUR) EEX

Daily Forward Closing Prices

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

100,00

jan-06 apr-06 jun-06 sep-06 dec-06 mar-07 jun-07 sep-07 dec-07 mar-08 jun-08ENOYR-09 EEXYR-09 ENOYR-10 EEXYR-10


15Back to normal hydrological balanceNordic countries

-50

-40

-30

-20

-10

0

10

20

30

40

0

100

200

300

400

500

600

700

800

900

1000 System price Hydrological balance

SYSSEK/MWhTWh

1996 199919981997 2003200220012000 2004 2005 2006 2007 2008


16Oil, coal, gas and CO2 allowances

0

50

100

150

200

250

jan-

06

apr-0

6

jul-0

6

okt-0

6

jan-

07

apr-0

7

jul-0

7

okt-0

7

jan-

08

apr-0

8

0

10

20

30

40

50

60

70

80

Oil (USD/bbl), Brent Front Month Coal (USD/t), API#2, Front Year Emission allowances CO2 (EUR/t), 2009 Gas (EUR/MWh), NBP, Front Year

USD EUR


17Hedging position as of 30 June 2008

% hedged of planned electricity generation (percentage values are rounded)

Nordic

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

remaining 2008 2009 2010

Central Europe

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

remaining 2008 2009 2010


18EBIT Q2 2008 vs Q2 2007

6 316

5 672825

1 330

547

193993 053

Q2 2007 Price Volume O&M Fuel Emission rights Other Q2 2008

SEK million


19EBIT Q1-Q2 2008 vs Q1-Q2 2007

17 74217 071 1 390

2 481

1 320

5093944 960

Q1-Q2 2007 Price Volume O&M Fuel Emission rights Other Q1-Q2 2008

SEK million


20EBIT Q2 2008 vs Q2 2007 – secondary segments

6 316

5 672

196680

208182

1 130

Q2 2007 Generation Heat Networks Markets Other Q2 2008

SEK million


21EBIT H1 2008 vs H1 2007 – secondary segments

17 07117 742477 284

470

441 119

Q1-Q2 2007 Generation Heat Networks Markets Other Q1-Q2 2008

SEK million


22Financial targets and outcome

Q2 2008

Single A category ratingCredit Rating

3.5 – 4.5 timesCash flow interest coverage after maintenance investments

11 % before tax (= 15 % RoE recalculated into the Groups RoNA requirement)

Return on Net Assets(RoNA, excl. IAC)

Return on Equity (RoE)

TargetsKey Ratio

15 % on average equity 14.8%*

16.0%*

4.0*

A2/A-Stable outlook

40-60 %Dividend pay-out 40.5 %

*Q2 2008 figure = LTM


23ROE analysis, 2002 – 2008

Please note: Figures according to Sw GAAP until 2003 and according to IFRS from 2004

ROE analysis, LTM

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2002 2003 2004 2005 2006 2007 Q2 2008

Period

MSEK

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

Percentage

Profit after tax Average Equity ROE

Sw GAAP IFRS


24Cash flow development

1) Figures according to Sw GAAP until Q4 2004 and according to IFRS from Q1 2005

-40 000

-30 000

-20 000

-10 000

0

10 000

20 000

30 000Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2

-99 2000 2001 2002 2003 2004 2005 2006 2007 -08

Quarter/Year

Free cash flow from operations - Rolling 4 quarter (1)Cash flow before financing activities - Rolling 4 quarter


25Investments Q2 2008

44%

24%

32%

Centr Europe Nordic Other

57%

43%

Maintenance Growth

6,4

1,9

4,4

Electr and Heat Networks Other

Total SEK12.7 billion Maintenance / Growth, %By Business Group, %

”Other” includes purchase of remaining minorityshares in Vattenfall Europe AG (SEK 4.1 bn)


26Net debt development

SEK million

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

Q4 200

0Q2 2

001

Q4 200

1Q2 2

002

Q4 200

2Q2 2

003

Q4 200

3Q2 2

004

Q4 200

4Q2 2

005

Q4 200

5Q2 2

006

Q4 200

6Q2 2

007

Q4 200

7Q2 2

008

Capital Securities SEK 9.3 billion

Acquisition of Elsam shares

Acquisition of Bewag and GZE shares

Dividend paid


27

Questions and Answers

© Vattenfall AB

Back-up slides


29Regulated and Non Regulated Business

EBIT excl. IAC

78% 78% 72% 73%

22% 22% 28% 27%

0%

20%

40%

60%

80%

100%

Q2-08 Q2-07 Q1-Q2 -08 Q1-Q2 -07

Non Regulated Business Regulated Business

Sales External

70% 62% 65% 59%

30% 38% 35% 41%

0%

20%

40%

60%

80%

100%

Q2-08 Q2-07 Q1-Q2 -08 Q1-Q2 -07

Non Regulated Business Regulated Business

Regulated business: Distribution, Transmission and Heat

Non regulated business: Generation and Sales


30Key data – BG Nordic

* Excl. intra group transactions** At the end of the period*** Full time equivalents (FTE)

Q2 Q2 % FY FY Amounts in SEK billion 2008 2007 Change LTM 2007 2006

Net sales 11.2 10.2 9.4 48.4 46.7 40.1External net sales * 12.1 9.0 34.4 49.4 44.4 48.2EBIT * 3.8 2.4 57.8 15.9 12.4 13.2

Net assets ** 92.7 83.7 10.8 n.a. 91.1 81.7

Electr. generation, TWh 22.4 22.8 -1.8 93.1 91.1 85.8Heat generation, TWh 1.8 1.8 0.0 10.2 10.7 8.5

Employees *** 9 508 9 458 0.5 n.a. 9 489 9 158


31Key data – BG Central Europe

* Excl. intra group transactions** At the end of the period*** Full time equivalents (FTE)

Q2 Q2 % FY FY Amounts in SEK billion 2008 2007 Change LTM 2007 2006

Net sales 30.8 27.7 10.9 129.7 122.3 111.0External net sales * 21.0 19.6 6.9 91.5 86.7 78.9EBIT * 3.6 3.4 6.0 14.9 16.5 15.0

Net assets ** 81.6 75.1 8.7 n.a. 78.7 70.6

Electr. generation, TWh 17.4 17.1 1.8 76.8 76.6 79.5Heat generation, TWh 4.0 3.5 14.3 25.9 25.5 26.7

Employees *** 22 222 22 327 -0.5 n.a. 22 396 22 657


32

Amounts in MSEK 30/6/08 30/6/07 Change 31/12/07 IFRS IFRS %

Consolidated balance sheet

Non-current assets 272,888 256,030 6.6 264,864Current assets 81,044 66,451 22.0 73,372Total assets 353,932 322,481 9.8 338,236Equity 112,372 116,102 -3.2 124,132Interest-bearing liabilitites 75,968 67,996 11.7 67,189Interest-bearing provisions 56,421 50,401 12.0 56,250Pension provisions 17,849 17,415 2.5 17,735Deferred tax liabilities 22,736 26,726 -14.9 23,704Other non-interest-bearing liabilitites 68,586 43,841 56.4 49,226Total equity and liabilities 353,932 322,481 9.8 338,236


33Net asset development

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

Q4 200

0Q2 2

001

Q4 200

1Q2 2

002

Q4 200

2Q2 2

003

Q4 200

3Q2 2

004

Q4 200

4Q2 2

005

Q4 200

5Q2 2

006

Q4 200

6Q2 2

007

Q4 200

7Q2 2

008

MSEKAcquisitionof Elsamshares

Acquisitionof Bewagand GZE shares

Consolidationof Danish

assets


34

Amounts in MSEK Q2 2008 Q2 2007 Change FY 2007 LTMIFRS IFRS %

Funds from operations (FFO) -666 4,932 34,049 28,073Change in working capital 8,068 3,514 129.6 -1,718 2,995Cash Flow from operating activities 7,402 8,446 -12.4 32,331 31,068Investments -12,773 -4,463 186.2 -18,964 -28,863Divestments 131 191 -31.4 925 988Cash and cash equivalents in aquired/divested companies 5 2 9Cash Flow from investing activities -12,637 -4,272 -195.8 -18,037 -27,866Cash Flow before financing activities -5,235 4,174 14,294 3,202Cash Flow from financing activities -2,775 -9,625 71.2 -18,662 -2,773Cash Flow for the period -8,010 -5,451 -46.9 -4,368 429Net debt at the end of the period -52,011 -46,765 -11.2 -43,740 -52,011

Consolidated cash flow statement


35Return on equity

Group - Return on EquitySix months interim accounts - 2008

0%

5%

10%

15%

20%

25%

30%

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Period

Rolling 4-quarterIFRS excl IAC

Rolling 4-quarter SwGAAP excl IAC

Average 4-years (16quarter) Sw. GAAP.IFRS from Q42004. Excl. IACRequirement 15%


36

Amounts in SEK millionAs of June 30, 2008 Treasury Germany Poland Nordic Total %Cash and bank 913 669 575 841 2,998 13

Investments 2,300 16,455 248 894 19,897 87

Total 3,214 17,124 823 1,735 22,896 100

Unused committed credit facilities amount to 13,334 SEK million and other undrawn credit- and overdraft facilities amount to 11,390 SEK million.

Break down of group liquidity


37

Amounts in SEK million

As of June 30, 2008 Treasury Germany Poland Nordic Total %

Subordinated perpetual Capital Securities 9,330 9,330 12

MTN 650 650 1

EMTN 33,479 33,479 44

Liabilities to assoc. companies 7,088 4,688 11,775 16

Liabilities to minority shareholders 34 6,108 6,142 8

Commercial papers 1,444 1,444 2

Bank loans and others 3,905 5,685 3,557 13,147 17

Total 55,896 10,407 9,665 75,968 100

Break down of group debt


38Adjusted gross and net debt31 June 2008 31 Dec 2007SEK million

-75 662-85 464= Adjusted net debt15 90416 057= Adjusted cash & short term investments-3 531-3 622

Minority owner´s share of German nuclear subsidiaries cash position

-3 224-3 217German nuclear "Solidarvereinbarung"22 65922 896Cash & short term investments

-91 566-101 521= Adjusted gross debt4 6714 66550% of Hybrid securities

-11 975-12 230Mining & environmental provisions-17 073-17 988

Present value of net pension obligations (incl actuarial gains/losses)

-67 189-75 968Gross debt


39Vattenfall debt maturity profile

June 30, 2008 June 30, 2007Duration (years) 3,0 1) 3,5 Average time to maturity (years) 6,1 1) 6,3Net debt (SEK bn) 52,0 46,8

SEK million

Excluding loans from associated companies and minority owners

1) Based on external debt. Excluding Capital Securities the duration is 2,4 years and average time to maturity 6,0 years.

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

2007 06 30

2008 06 30


40

EUR/tonne

CO2 allowances

0

5

10

15

20

25

30

35

40

jan-

06

apr-0

6

jul-0

6

okt-0

6

jan-

07

apr-0

7

jul-0

7

okt-0

7

jan-

08

apr-0

8

200820092010


41

17415

26674

11296

26726

1464

44156552

17849

30106

12230

22736

2228

47767081

PensionsNuclearMiningTaxesOtherPersonnelLegal

Group provisions (IFRS)

30 June 2008

SEK 97,006 million30 June 2007

SEK 94,542 million


42Key ratios

Key Ratios (% unless otherwise stated) Q2 2008 Q2 2007 LTMRoNA (1) 16.1 15.7 16.1

RoE (1) 14.8 19.9 14.8

Operating margin 17.9 17.7 19.4

Pre-tax profit margin 15.5 15.6 15.7

Cash Flow interest coverage aftermaintenance investments, times 1.1 8.4 4.0

FFO/net debt (1) 54.0 69.0 54.0

Equity/assets ratio 31.7 36.0 31.7

Net Gearing - Net debt/equity 46.3 40.3 46.3

Capitalisation - Net debt/net debt + equity 31.6 28.7 31.7

1) Q2 2008 value = LTM

Documents

Vattenfall Q2 Results 2008 · Q4 2000 Q2 2001 Q4 2001 Q2 2002 Q4 2002 Q2 2003 Q4 2003 Q2 2004 Q4 2004 Q2 2005 Q4 2005 Q2 2006 Q4 2006 Q2 2007 Q4 2007 Q2 2008 ... to build Europe’s